Kimei: Spiralling inflation worrying banking sector

The increasing rate of inflation in the country has been mentioned as the main challenge facing the banking sector as it results in high operational costs.

This was said in Dar es Salaam yesterday by CRDB Managing Director Dr Charles Kimei when briefing about the bank’s financial report for the first quarter of 2012.

He said the increasing inflation has been affecting currency circulation, hence increasing the lending rate.

“When the inflation is high depositors in banks will demand for increment of the lending rate which will be over 20 per cent,” he said.

Dr Kimei said that the situation occurs when the central bank if fighting to control inflation by taking the money out of circulation. He said the situation also poses difficulties in repaying loans.

He further said that for the first three months his bank has continued to implement its five-year plan which has been successful.

He said the bank has continued to improve its banking services, including stabilizing the communication system, opening more branches and increasing the number of ATM machines so as to move the services nearer to the people.

“We are planning to install a total of 50 ATMs in different parts of the country as efforts to make our services closer to the people. Currently we have 250 ATMs,” he said.

Dr Kimei said that loans increased by 20 per cent in the first quarter of this year and his bank was currently providing loans to the microfinance sector and individuals as efforts to increase income per person and hence boost the national income.